The conditional fee agreement (CFA) regime, in which the loser is liable for an uplift on their opponent’s legal fees, breaches European rules on human rights, the European Court of Human Rights (EHCR) ruled today.

Keith Schilling

Mirror Group Newspapers, the parent company of the Daily Mirror, went to the European Court after it was ordered to pay legal costs built up by supermodel Naomi Campbell when she sued the newspaper for breach of privacy.

That landmark case, in which the model was represented by Schillings partner Keith Schilling, was only done on a CFA at the House of Lords level, meaning Schillings charged MGN a success fee uplift of £280,000 as part of more than £1m of costs.

In 2005 the House of Lords threw out the appeal against the success fee, silencing calls for a means tested CFA.

Davenport Lyons partner Kevin Bays then took the case to the European court for the newspaper, while counsel opinion was sought from Blackstone Chambers’ David Pannick QC and director of public prosecutions Keir Starmer QC, who was then at Doughty Street Chambers.

The ECHR ruled that the £1m costs the paper had to pay, which was partly lawyers’ ’success fees’, were disproportionate. The fee, it said, violated the right to freedom of expression.

In 2004, the House of Lords upheld Campbell’s libel case against the Daily Mirror by a margin of three judges to two, and thereby reinstated the High Court’s earlier decision to award £3,500 in damages to the supermodel after the Daily Mirror printed photographs of her leaving a Narcotics Anonymous (NA) meeting (6 May 2004).

Any way the public looks at this the legal profession will not come well. £1M in fees when the original damages award was £3500.
The resulting turmoil from this case will be interesting and is doubtless sending a shudder down the spines of many of the ‘great and the good’. Is this another well aimed nail in the coffin of the billable hour. To those who consider fixed fees an anathema – think again. Some litigators have been doing it for years.

Serves the media luvvie lawyers right. CFAs were intended to allow access to justice for those who can’t afford to fund litigation themselves, not for multi-millionaire drugged-up (or, on my lawyer’s advice, quite possibly not!) models who can. I’ve not read the judgment, but if the issue is “freedom of expression” it shouldn’t have a knock-on effect on CFAs in other areas (e.g. personal injury).

CFA’s with a 100% uplift may have increased access to justice for Claimants, but they have decreased access to justice for Defendant’s as it encourages Defendant’s to pursue economical settlements rather than take cases to trial with the possibility of having to pay double the Claimant’s costs.

I have not read the decision, but if the rationale behind it has been accurately reported then this is a perverse decision.

CFAs are NOT a bad thing per se. They make fighting some cases possible where they would otherwise be impossible, allowing us to help those in need where the case would otherwise be turned away for lack of funding. If it ain’t broke don’t fix it, and just because the insurers / Jackson think it is broken does not mean that it is.

The Courts already have the power to reduce the proportion of success fee recoverable. That should be enough.

Contingency fees could encourage exaggerration of damages by the profession. That should be borne in mind.

So, MGN’s right to freedom of expression is more harmed by the risk of paying a CFA on losing at the Supreme Court than Ms Campbell’s privacy was by MGN appealing the first instance decision to the Court of Appeal?

I don’t doubt that a 20 year career as a supermodel leaves you seriously wealthy but wealthier and in less need of access to justice than a large national newspaper?

The decision deals with freedom of expression – ie it relates to publications by the media. It should not in itself prevent the use of CFAs in personal injury claims. However, no doubt it will be used as an excuse to abolish the recoverability of success fees and ATE premiums from all CFA backed litigation.

It would be a terrible shame if the many who can’t afford litigation (and can no longer get legal aid) in order to recover compensation for real losses were to lose out in order to allow newspapers to say what they like about rich people who behave badly and can afford to sue them.

It is essential that politicians and the media themselves recognise the difference.

“The Government’s mitigation was that they are implementing the recommendations of Lord Justice Jackson! It really says something when the ECHR rules that our CFA system is a breach of human rights. High time for all those vested interests in the legal profession to pause for reflection. The Golden Goose is on the chopping block awaiting the fatal blow and the greedy minority of solicitors who have abused the CFA regime in the name of access to justice have only themselves to blame for the near certain introduction of reforms that will hamper deserving causes.”

No system will ever be perfect but the present system is a lot closer to providing a fair system for access to justice that the potentially disasterous alternatives being proposed. It’s not practical to means test CFAs per se. Furthermore, were someone to have say a net wealth of £1m (including domestic home etc..) and are unfortunate enough to find themselves faced with a legal cost exposure of say £700k, are they expected to risk everything in a dispute against a large corporation? Doubtless many of the vocal high paid stakeholders supporting the abolition of recoverability are not of limited means, but were they ever directly involved in litigation against a super defendant presumably there would be a cap to their personal wealth beyond which no reasonable person would gamble everything? Stripping of recoverability will result in a regressive system directly hitting those of limited means the hardest. Defendants can tactically seek to drive up costs knowing full well they can push the claimant into a settlement at undervalue, since the longer the case runs the higher success fee/premium the claimant will have to pay their lawyers. How is that access to justice? Are we not a Country that prides itself on having a legal system that seeks to put the suffered party back in the position they were before the acts of the wrongdoer? The UK isn’t considered a jurisidiction for providing fanciful high damages awards. If clients have to utilise a significant proportion to pay contigency fees/success fees and premiums no such claimant will ever feel they’ve been made whole as a result of the wrongdoers acts.
Furthermore, there is the small matter of the quality of legal representation. Whereas a super defendant will doubtless select a leading law firm/QC to represent their interest, in a non recoverable system the claimant of limited means will need to be mindful that the uplift of their solicitors/counsel’s fee will impact on their net recovery. Claimants could then be faced with far from evenly matched representation purely to protect their net recovery. Wasn’t the thrust of Lord Jackson’s proposals to provide access to justice at proportionate cost? There are ways of dealing with proportionality but with the proposals as they stand we are fast heading towards a system that is going to destroy access to justice for many who need it most simply because of the unique, and they are unique in their own right, nature of libel and personal injury litigation where admittedly they is a need for reform.
Does anyone spare a thought for the SME businesses and the sandwhich classes involved in litigation?

Notwithstanding the fact it appears to be a ludicrous decision, this case must be viewed in isolation as the facts are enormously different to that which most Claimants in any form of litigation actually face.

It certainly should not be used by the Government to pander to the mainstream media, as it inevitably will be….